2022 (12) TMI 133 - AT - Central Excise

Tribunal rules in favor of appellant-assessee in excise duty dispute.

MY HOME INDUSTRIES PVT LTD. Versus COMMISSIONER OF CENTRAL TAX, Vishakhapatnam

MY HOME INDUSTRIES PVT LTD. Versus COMMISSIONER OF CENTRAL TAX, Vishakhapatnam - TMI Issues Involved:1. Determination of the 'place of removal' for the purpose of calculating the assessable value under Section 4 of the Central Excise Act.2. Inclusion of freight charges in the assessable value for goods delivered on a Free On Road (FOR) basis.3. Eligibility for refund of excise duty paid on freight charges.4. Applicability of the limitation period under Section 11B of the Central Excise Act for refund claims.5. Conclusion of proceedings under Section 11AC(1)(d) of the Central Excise Act.Detailed Analysis:1. Determination of the 'place of removal':The primary issue was whether the 'place of removal' for the purpose of calculating the assessable value under Section 4 of the Central Excise Act was the factory gate or the buyer's premises. The appellant argued that the factory gate was the place of removal, while the Revenue contended that it was the buyer's premises due to the FOR basis of delivery. The Tribunal referred to the Supreme Court's ruling in Ispat Industries Ltd., which clarified that the 'place of removal' refers to the manufacturer's premises (factory, warehouse, or consignment agent's premises) and not the buyer's premises. This interpretation was reaffirmed by the Tribunal, which concluded that the factory gate was the place of removal.2. Inclusion of freight charges in the assessable value:The Revenue argued that freight charges should be included in the assessable value because the goods were delivered to the buyer's premises on an FOR basis, with the risk in transit and ownership remaining with the appellant until delivery. The Tribunal, however, relied on the Supreme Court's ruling in Ispat Industries Ltd., which stated that the cost of transportation from the place of removal to the place of delivery is excluded from the assessable value. The Tribunal held that the freight charges were not includible in the assessable value as the place of removal was the factory gate.3. Eligibility for refund of excise duty paid on freight charges:The appellant sought a refund of excise duty paid on freight charges based on the Supreme Court's ruling in Ispat Industries Ltd. The Tribunal found that the amounts paid towards duty, interest, and penalty were in the nature of a revenue deposit since no show cause notice (SCN) was issued, and no proceedings were concluded. The Tribunal held that the appellant was entitled to a refund of the amount deposited, totaling Rs. 4,23,81,640/-, along with interest as per rules.4. Applicability of the limitation period under Section 11B:The Revenue argued that the refund claim was hit by the limitation period under Section 11B of the Central Excise Act. The Tribunal, however, found that the amounts paid by the appellant were in the nature of a revenue deposit and not a duty payment. Therefore, the limitation period under Section 11B was not applicable. The Tribunal allowed the refund claim, rejecting the Revenue's contention regarding the limitation period.5. Conclusion of proceedings under Section 11AC(1)(d):The Revenue contended that the proceedings were concluded under Section 11AC(1)(d) as the appellant had paid the differential duty, interest, and penalty upon audit intervention. The Tribunal, however, found that no SCN was issued, which is a condition precedent for concluding proceedings under Section 11AC(1)(d). Additionally, no letter of closure was issued by the Revenue. Therefore, the Tribunal held that the amounts paid were in the nature of a revenue deposit, and the proceedings were not concluded under Section 11AC(1)(d).Conclusion:The Tribunal allowed the appeals filed by the appellant-assessee, setting aside the impugned orders. The Tribunal dismissed the appeal filed by the Revenue and allowed the cross-objection by the assessee, granting a refund of the amount deposited along with interest as per rules. The Tribunal reaffirmed that the place of removal is the manufacturer's premises and that freight charges are not includible in the assessable value for the purpose of calculating excise duty.